Note: Make a kid's cupcake party even easier on yourself: Go to your favorite bakery and ask for undecorated vanilla and chocolate cupcakes. Then, all you have to do is whip up some icing and put out the toppings!
Preheat the oven to 350 degrees F. Line 2 (12 portion) muffin tins with paper cupcake liners and set aside.
In a bowl, using an electric mixer, mix the cake mix, water, oil, eggs, and coconut extract on medium speed until moistened and smooth. Stir in the chopped coconut. Divide the batter evenly among the muffin tins. The batter will nearly fill each liner to the top. Bake until the muffins spring back when lightly touched, or a toothpick inserted in the center comes out clean, about 15 to 18 minutes. Transfer to a rack to cool.
When cool, put the icing out with spoons or small spatulas along with bowls of the cupcake toppings for the kids to decorate their own cupcakes.
Cupcake Icing for a Crowd:
In the bowl of a large electric mixer, using the paddle attachment, whip the butter on high speed until very soft. Meanwhile, place a large sheet of parchment paper on a work surface. Using a large sifter, sift a pound of confectioners' sugar onto the parchment. This helps prevent clumping, and makes the mixing easier. Lower the speed of the mixer, and, using the parchment as a funnel, pour the sugar into the bowl and mix slowly until combined. Add the milk and mix until combined. Sift the second pound of sugar onto the parchment sheet. Again at low speed, add the sugar and mix well. Once combined, sift the remaining sugar and add it with the vanilla and mix. Once it is combined, turn the mixer speed up and beat the icing until very light and fluffy, about 3 to 4 minutes.
If desired, divide the icing into smaller batches and color with food coloring.
Spread the icing on cooled cupcakes while at room temperature. Refrigerate any leftover icing, but be sure to let it come back to room temperature before using. Re-whip the icing to make it fluffy again.
Yield: about 8 cups, enough for at least 6 dozen cupcakes